Macquarie Bank (MBL) Update

Submitted by Craig Strzelecki on 10 April, 2007 - 17:49

Macquarie Bank (MBL) has a retained price target of $102.29 per share from market analyst Citigroup Investment Research. The main impact of the proposed conversion to a Non-Operating Holding Company (NOHC) is the potential gearing up of the non-banking operations which the analyst believes could behave like a $2.4bn equity raising without any share issuance. This could add up to $9.40ps (or 9%) to analyst valuations, excluding any asset sale gains. This level of flexibility in the non-banking group's post-NOHC balance sheet could provide acquisition firepower of up to $8bn given the typical level of non-recourse debt applied to seed assets –or exposure to as much as $50bn worth of assets if the increasing trend of consortium deals continues (where MBL takes a 10%-15% equity stake). M&A fees on $8bn of acquisitions could amount to $80m-$120m before any asset gains, although consortium deals where Macquarie Bank (MBL) acts as financial adviser could see M&A fees reach $1bn on $50bn of asset value, triggered by: (i) consortium acquisition; (ii) MBL selling down to its satellites; and (iii) consortium divestiture. While the potential conversion to a NOHC structure is still in its infancy (let alone any implications that follow), the analyst retains a $102.29 target price, predicated on positive EPS momentum across the group's business and an undemanding valuation with the stock trading on a FY08e PER of 14.8x.

Macquarie Bank Limited is listed on the Australian Stock Exchange (ASX) under stock code MBL. You can view their investor website here. MBL was listed on the ASX on 29 July, 1996. David Clarke is the chairman of Macquarie Bank and the managing director is Allan E Moss. The company is involved in investment Banking, Banking and Financial Services. Macquarie is a diversified international provider of financial and investment banking services, headquartered in Sydney, Australia. Macquarie Bank evolved from Hill Samuel Australia Limited, which was established in 1969 as a subsidiary of the UK merchant bank, Hill Samuel & Co. In 1985, a banking licence was acquired and operations began under the name Macquarie Bank. In 1996, Macquarie Bank’s fully paid ordinary shares were quoted on the Australian Stock Exchange. In Australia, Macquarie is a full-service investment bank providing financial market trading and advisory products and services. In the Asia-Pacific region, the Bank provides a broad range of investment banking services and in the Americas, Europe, Africa and the Middle East, it focuses on particular business areas in which its expertise delivers value to clients. Macquarie has reported successive years of record profits and growth since 1992, and now employs over 10,000 people in 24 countries. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade MBL. Check your charts and good luck with your share trading!